India, Sweden sign social security pact

SummaryThe pact aims to relieve workers from double taxation and provide cooperation in various areas.

India and Sweden today signed a social security agreement that will relieve their workers from double taxation and provide for cooperation in areas of labour market expansion and orderly migration.

The agreement was signed by Overseas Indian Affairs Minister Vayalar Ravi and Sweden's Minister for Social Security Ulf Kristersson.

Under the agreement, India workers on short-term contracts of up to two years will not be required to make any social security contribution in Sweden provided they continue to make social security payments India.

The relief will be available to Indian workers even if an Indian company sends its employees to Sweden from a third country. Officials said similar relaxation will be provided to Swedish citizens working in India.

As per the pact, Indian workers will be entitled to "export" of their social security benefits if they relocate to India after completion of their service in Sweden. Self- employed Indians will also be entitled to export of the benefits on their relocation to India.

"The government of India has taken the initiative to enagage in dialouges with different European countries to avoid double taxation and enable people to go and work there," Ravi said.

There are about 18,000 Indians in Sweden most of whom are working as professionals and self-employed.

According to Indian labour laws, all employees and employers falling under the purview of the Employees Provident Fund Act, 1952, are required to make mandatory contribution towards provident fund. A mandatory contribution fund is known by different names in different countries, such as social security in the US.

The Swedish Minister said Indian was the first Asian country with whom Sweden has such an agreement.

Though professionals posted in foreign countries continue to make such payments in India, they are compelled to pay social security tax in the host countries too leading to double contribution.

Speaking on the occasion, Kristersson said there was scope for further enhancing trade between the two countries and highlighted opportunities for Indian IT companies in Sweden.

"Sweden has a great oppurtunity for companies engaged in Information Technology sector. There are 156 Swedish companies operating in India and we hope to have more. India is an open economy and we want to explore more oppurtunities here," he said.

Officials in the Ministry of Overseas Indian Affairs said the pact will provide for